Bahrain is getting ready to levy five per cent worth extra tax (VAT) from January one, 2019, following the introduction of the tax in GCC states UAE and Kingdom of Saudi Arabia in 2018.
During a gathering command at the ministry of Finance and financial system on Tuesday, officers confirmed that they’ll “review the mechanisms of applying VAT throughout the period of time for its launch” which it’ll still organise and participate in a very series of workshops for firms and establishments to boost awareness of the technical, legal and procedural aspects of the tax.
Sheikh Salman bin Khalifa Al Khalifa, minister of Finance and financial system, additionally stressed that the govtagencies can “ensure the right implementation of VAT procedures from the primary day of its launch throughoutthe period of time, taking under consideration the importance of market stability”, the official Bahrain news organization (BNA) reported .
VAT DETAILS:Earlier this month, Bahrain’s ministry of Finance proclaimed that VAT are going to be introduced in an exceedingly phased manner through shift obligatory registration thresholds, practice PwC unconcealed.
According to the rules, businesses earning over BD5m ($13.2m), can have to be compelled to be registered by Janone, 2019, whereas those creating over BD500,000 ($1.3m) and BD37,500 (over $99,730) have to be compelled to be registered by July 1, 2019 and Jan one, 2020 severally.
Businesses below the obligatory registration thresholds for 2019 aren’t needed to register next year whereas those desire to voluntarily register in 2019 should exceed the voluntary registration threshold of BD18,750 ($49,860).
Bahrain’s VAT law conjointly sets out variety of variations from the VAT laws that are already been enforced in Asian country and also the UAE.
Some of these key variations relate to the zero-rating and VAT exemption provisions within the law, PwC stated.
“In specific, it’s expected that Bahrain can apply the zero-rate on basic food things, the development of latest buildings, education and tending services, native transport services, in addition as oil and gas and derivatives,” it said.
“The sale associate degreed lease of realty in addition as bound monetary services (ie those with an implicit fee) and life insurance/reinsurance are going to be exempt from VAT. monetary services provided for a particular fee together with account management, bound trade finance services and fund management are going to be subject to straight forward rate VAT. customary rate VAT also will apply to non-life insurance/reinsurance,” the report else.
The rules contain bound “business-friendly” provisions aimed to cut back the burden of VAT on businesses and bound taxpayers, PwC stated.
These include:Tax invoices being acceptable in Arabic or English.
“The demand in Saudi Arabia to provide tax invoices alone in Arabic caused substantial issue for several businesses with customary ERP systems,” the report declared.
The acceptance of a financial statement as a legitimate tax invoice, subject to some minor amendments.“This are welcome by banks as this could cut back the burden to provide a separate tax invoice for bank accounts or to considerably adapt such statements to befits the foundations for traditional tax invoices,” said PwC.
Provisions permitting businesses to use to defer the payment of VAT on imports of products to their next instrument.“This are welcome by massive importers UN agency could well be during a regular VAT refund position,” the report aforementioned.
Provisions permitting businesses UN agency export quite fifty per cent of their turnover and UN agency expect to be during a regular VAT refund position to request that the domestic reverse charge mechanism can apply on bound native purchases.“This may cut back the cash flow burden of VAT refunds for these exporters, consistent with PwC.”